In short
Podcast Episode Notes: Why are there so many illegal weed stores in New York City? (Part 1)
Podcast Overview
- Title: Search Engine
- Host: PJ Vogt
- Description: A podcast focused on making sense of the world through questions, ranging from the trivial to the profound.
- Episode Focus: Exploration of the proliferation of illegal cannabis shops in New York City following legalization in 2021.
Episode Summary In this episode, PJ Vogt investigates the surprising rise of illegal weed stores in New York City since cannabis was legalized for adult use in 2021. While the intention was to create a legal market, the reality has led to an influx of unlicensed shops, prompting an exploration of the historical context surrounding cannabis prohibition and its implications for the current situation.
Key Themes and Concepts
- Historical Context of Cannabis Prohibition
- Reefer Madness: The term refers to the cultural backlash against cannabis, rooted in the early 20th century when racial and social anxieties were stoked by narratives around cannabis use.
- War on Drugs: Policies in the 1970s, particularly New York’s Rockefeller drug laws, criminalized cannabis severely, leading to mass incarceration and a long-standing stigma surrounding cannabis.
- Racial Connotations: The term "marijuana" was deliberately used to invoke fear and racial prejudice against immigrants and minorities associated with its use.
- Current Landscape of Legalization
- Legalization in New York: Cannabis was legalized in March 2021, with hopes of creating an equitable market for those previously affected by prohibition.
- Illegal Operations: Despite legalization, thousands of illegal weed stores have emerged, often outnumbering legal dispensaries, creating a chaotic retail environment.
- Interviews and Perspectives
- Willie Mack: Co-founder of a cannabis company and board member of the Minority Cannabis Business Association. Mack expresses frustration over the inequities in cannabis ownership and the impact of historical injustices.
- Alex Norman: Former weed dealer who highlights the difficulties legacy operators face and the market dynamics that favor illegal sellers over licensed ones.
- Failed Promises of Equity
- California’s Example: New York aimed to learn from California's legalization mistakes, where many efforts to empower communities affected by prohibition fell short.
- Investor Dynamics: The involvement of opportunistic investors in California led to deals that often exploited inexperienced legacy operators, undermining the equity goals.
Discussion Points
- Density of Illegal Shops: During a walking tour in Manhattan, Vogt and his colleague note the overwhelming number of cannabis shops, often operating without licenses.
- Cultural Shift: Many former regulators and activists express disappointment with the current state of the legal cannabis market, which overshadows the intentions behind legalization.
Major Takeaways
- Complexity of Legalization: Legalization is not simple; the transition from prohibition to a regulated market involves numerous challenges that states are still grappling with.
- Social Equity Concerns: The episode emphasizes the need for careful crafting of policies that genuinely address the harms caused by past drug laws, ensuring that communities most affected benefit from legalization.
Conclusion The episode sets the stage for deeper exploration in subsequent parts, promising an examination of the fallout from New York’s legalization efforts and the ongoing struggle for equity in the cannabis market.
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For further insights and discussions, support the podcast at [searchengine.show](https://searchengine.show).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00Hi, I'm PJ Vogt. This is Search Engine. Each week we try to answer a question we have about the world. No question too big. No question too small. We just announced that we have a new premium feed called Incognito Mode. It offers all sorts of benefits, like bonus episodes, plus the chance to support our work. We announced it last week. A ton of people signed up. It was a huge shot in the arm for us. If you would like to join them, or if you'd just like to learn more about what Incognito Mode offers, go to searchengine.show. Okay, this week's episode, after some ads. This episode is brought to you in part by Joe's Jeans.
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2:01Okay, check, check, check, check. Noah, where are we? We're on Delancey Street and... Neither was the intersection. Delancey... Two search engine reporters, myself and Noah John, were outside in Manhattan the other day. On, it turned out, Delancey and Orchard Street. We were taking a short walk around the neighborhood. If you haven't been to New York since the pandemic, one thing has changed. One thing that, when you just walk around and notice it, can be kind of staggering. It's everywhere. Okay, let's walk around. A new kind of business that sometimes feels like it's driving out every other business.
2:38Retail's version of an invasive species. Okay, so technically we haven't even moved and I can see one. There's a smoke shop called Flame Zone Convenience. Stores selling weed. The green signage, they're like, definitely sells weed. I think that one's a new one. I've actually never seen that one. They're like popping up like mushrooms. A few steps away from Flame Zone Convenience, another weed spot. This, we're passing a store called The Commission. They've got like the red velvet rope outside. They have a nice green couch. Looks like a nice felt. Some guys smoking inside. The Commission had a sign outside advertising cannabis-infused food, hoagies, and other snacks.
3:16Noah and I paused for a moment to appreciate the concept. You can get a cheeseburger that will get you high from cannabis while you're eating it. Yeah, that looks pretty sick. Oh, now we got another one. All right, Empire Cannabis. Just a couple stores down from The Commission, Empire Cannabis, A big store, but today their steel gates were down. They actually had a fire, which shut them down for a little while. Hi, Trisha. We stopped for a moment to greet Trisha, one of Noah's yoga instructors. Oh, hi. What's your name? And I asked her the question that had brought us here. Have you noticed there's a lot of cannabis shops on the street in New York City?
3:47Do I see a lot of cannabis? Yeah. Yeah. Everywhere. See ya. That's your yoga teacher? Yeah. Trisha moved on, perhaps to instruct yogis. On our walk, on any given block, we'd usually at least see one weed store, sometimes as many as four. Most of them little fly-by-night operations that sell flour and edibles, some more high-end. But the sheer density. We were out there because I wanted to communicate it to you. Blue cookie right across the street from its competitor, Cali Plug, each with a very similar product selection. Munchies, Sissy, Crazy Man. What's Crazy Man? All right. On another block, three shops in a row.
4:26That's a Dubai supply of bought and pre-rolls. How were they? They were pretty good. The guy in there was nice, too. We were passing another one. Exotic cloud smoke shop. I am struggling to convey to you the absurd density of all these stores. In our 15-minute walk, we passed one pharmacy, two pizza places, and 10 weed spots. And the thing that most people I've talked to don't understand is that all the stores we're looking at on this street are operating illegally. Weed was legalized in New York City in 2021, but it's like liquor. You need a license to sell it. These shops are all unlicensed.
5:04There's thousands of them. Who's behind these stores? We walk inside one. The walls are decorated with spray-painted images of a stoned Chester the Cheetah and an even more stoned Captain Crunch. Looks like a slightly dingy candy store, except almost all the products are junk food or weed. A cool place for kids staying out because it's like lots of candy. I walk over to the guy behind the counter, a stylish young dude dressed in all black with a black baseball hat. So wait, tell me, tell me, you started working at the cannabis store two weeks ago? Two weeks ago, yes, correct. And how did you get the job?
5:36Through a family friend. And have you, are you like a smoker? I don't smoke, no. Are you like, do you have cannabis expertise? Not really, no. Why did you take the job? You know, rent in New York. Expensive. I'm originally from Mississippi. Just moved here. Got it. Yeah. Are you worried at all about the legality of selling weed? No, not really. I mean, what's the worst? Is this store a legal store or not a legal store? Not sure, honestly. They don't disclose out with us employees. What do they say to do if something happens? They're reliable for everything. So pretty much if anything happens, they come and take care of everything.
6:16And you don't feel stressed out? No, not really. Not at all.
6:23We walked back out onto the street, where suddenly I felt hyper-conscious of how, despite all its mess and noise, most of New York is, to me, a cacophony of rules. Cops who put tickets on windshields and into the hands of the cyclists running stop signs, Fire inspectors and building inspectors and restaurant inspectors terrorizing every business we have here. New York, despite its chaos, is the most regulated, rule-bound, fine-administering place I've ever witnessed. Unless you want to sell weed. How is it that these weed stores are our sole concession to anarchy? How did the city get overtaken by thousands of illegal smoke shops?
7:07That was the question we started with. But the answer to that question, it's bigger than New York. It's part of a story that goes back almost 100 years. This week, we're trying to understand this funny pattern that keeps happening in states that legalize weed. They keep screwing it up. We're going to look at California. We're going to look at New York, which tried to learn from California. It's a fascinating story of very good intentions with very strange outcomes. We are now living in a world where in much of America, you can buy and smoke weed freely, but many of the activists who fought for that reality are heartbroken at what it actually looks like.
7:47That story of heartbreak and of people still trying to imagine a different kind of world, we'll tell it across two episodes. Chapter one, Reefer Madness. About a year ago, I'd developed this habit of slightly ruining dinner parties by only wanting to talk about New York's illegal weed stores. People liked to theorize about what was going on here, but they just didn't have any answers to my questions. Until, at one of those dinners, I'd ended up sitting next to Willie. Can you introduce yourself? Yes, hi, my name is Willie Mack. I am the co-founder and CEO of a company called Frank White. I'm also a member of the board of directors of the Minority Cannabis Business Association, which is the largest trade association in the U.S.
8:32looking to bring more minorities into the cannabis space as owners and operators and make sure we have patient care. Willie had had a strange journey with cannabis and possessed strong feelings about the meaning of those stores. They deeply, deeply upset him. So I brought him into the studio to ask him about it. So you're not like a professional political lobbyist. I just want the story of like how you ended up in this role. What is even your backstory with like weed? Like what is your history with weed in your life? My history with cannabis, and I choose the word cannabis. Should I not use the word weed?
9:04You can use the word weed. I would not use marijuana because marijuana has supposedly has a history of racial connotation with that word. What is a racial connotation with marijuana? So if you go back to the 1920s, there's a couple of sort of things that were happening in culture and the world that kind of converged at the same time. And it all came to a head in New Orleans and New York because of jazz music. So this all goes back to music. It's all tied to the culture of music. Because what was happening was you had all this beautiful music being made by the most amazing people. You know, I call cannabis the ultimate ghostwriter because it's uncredited for most of the music that's been created in the U.S.
9:35for the last hundred years. Although sometimes credited. Sometimes credited, but not really from a cultural standpoint credited. Like cannabis was there from jazz, every genre of music helping sort of fuel the creativity of it. So you had white people going to these jazz clubs and smoking pot and getting hot and having fun and having white women around black and brown people and Mexican people and this sort of cross-cultural thing. But, you know, America doesn't really like that black and brown people mixing with the pretty white girls. And one way to stopping this is to go after this plant people are smoking and using to have fun and go dance in Harlem and New Orleans.
10:06So they created this sort of scare. We knew that it was called cannabis. We rename it marijuana to make it sound more Mexican and scary. There's this, you know, drug coming across the border from the Mexicans, this thing that the blacks, the Mexicans are using to take our women and make people go crazy and jump off buildings. So all of that sort of reefer madness stems from that history in the early 1900s. So you refer to it as cannabis rather than marijuana because for you, what's baked into that word marijuana is it's like… A racist connotation. Yeah. To like make it sound scary. And foreign.
10:36Yeah. Mexican. That's fascinating. So, but you know, weed, pot, like smoke, gas, that stuff I don't mind.
10:45Attacking cannabis to attack some of the people who smoke it has been a longstanding American tradition. In the early 1900s, Mexican refugees fleeing a dictatorship brought both cannabis and the practice of smoking it with them to America. A 1917 federal report noted with alarm that in Texas, the practice was spreading, even reaching, quote, lower class whites. Over the next century, a series of increasingly severe anti-cannabis laws would pass. but the drug would only become more popular. Americans smoked through the Harrison Act, the Boggs Act, and despite Nixon's Controlled Substances Act, the 1970s still occurred.
11:22You really can't understand anything that's happening with legalized cannabis today in New York, in California, anywhere in America, without understanding the 1970s. The moment when cannabis prohibition went into overdrive. In New York, near the beginning of that decade, Governor Nelson Rockefeller unveiled some of the most severe drug laws this country has ever seen. Drug laws which would become a kind of national model. Under the Rockefeller drug laws, a person who possessed just one ounce of weed could receive a maximum of 15 years in prison. That meant a 19-year-old high school kid caught holding enough pot to share with his friends could go to prison at least until he was 34.
12:03For weed.
12:07From the vantage point of the present, you can't help but wonder, how were people talked into this? Ladies and gentlemen, that's an unusual press conference. Well, this is the press conference where it all began. January 23rd, 1973. New York Governor Nelson Rockefeller unveiled his new package of drug laws. I have one goal, one objective, and that is to stop the pushing of drugs and to protect the innocent victim. He's at the podium, a grandfatherly-looking man in a pinstripe suit with a vintage New York accent. Next, I'd like to call on Reverend Earl Moore. In the press conference, he's joined by a string of speakers, mostly black community leaders who are there to support him.
12:48We come today believing that our governor, our chieftain, bears the mark of a hero. They're commanding Rockefeller for taking responsibility for a city that had been collapsing. New York then, with five times more homicides per capita as today. One after another, they draw scenes of life in a city under siege from drugs. Chiefly heroin. I have seen the nation's number one state, New York, become a state of fear for more than 18 million law-abiding citizens. Finally, Rockefeller himself retakes the stage. He explains that before things got this bad, he himself was a bleeding heart type of guy. That's right.
13:32I was on this kick of trying to get the addict off the street into treatment, and on the theory that if we got them all off the street into treatment, there'd be nobody to buy the drugs and therefore the pushers would go away. Now this was a beautiful concept, except it just didn't happen to relate to the realities because the pushers keep finding new people. Rockefeller is saying you can't treat drug addiction by helping people get sober. You actually have to target dealers because otherwise the dealers, or pushers as he calls them, will keep finding new people to hook on drugs. So Rockefeller's bold new plan?
14:10Life sentence for pushers. Get rid of all of the drug dealers. In his eyes, a pusher was a pusher, whether they sold heroin or weed. At the same time Rockefeller is passing these laws, the Nixon White House was pushing for similar laws with similar ideas on a federal level. Years later, a former member of that administration, John Ehrlichman, would tell reporter Danbaum that the drug war hadn't just been about crime or addiction, but had come from an understanding that certain drugs, particularly cannabis, were associated with Nixon's political enemies. Here's Willie. The war on drugs became a way for the government to say we can't criminalize and say we're going to go after black people and brown people and people who are counterculture to the capitalist system we live in.
14:53So hippies, all of those things, but we can criminalize it by the fact that you're using this plant that's been grown for thousands of years and used all over the world for centuries as a tool for healing and medicine. Okay, wait, so hold on. I asked you a totally different question though. Not that everything you're saying is fascinating, but you, like what is your history with? Oh, sorry. That I would not call marijuana. Thank you. Calling weed actually makes me feel like a dad a little bit. We're older now. Cannabis. My history is I first consumed cannabis in college. And the first time I smoked, I didn't get high.
15:24The second time I did, and I was like, oh, this feels— This is what it is. This is what it feels like. I can't smoke weed. Like, it makes me think about all my personality defects. But I love the smell of other people's weed so much. Like New York right now where it's just like— Everywhere. I am enjoying it so much. A lot of people hate it. And I'm like, hey, you know, I get it. But, you know, it is what it is. And the funny thing is, I was afraid of weed. I was actually a really good kid in high school because I grew up doing the Nancy Reagan, you know, drugs that make your brain turn into eggs and maybe an omelet with like a side of bacon.
15:57So I was just like— That all worked on you? Like that idea that like— It worked on me in the sense that I grew up in D.C. during the 80s, during the crack epidemic. So drugs were definitely something that were like bad. Cracking drugs and heroin and all that stuff was just all grouped together as one sort of like drugs are bad. I grew up in the church, and I was the youngest kid, and I was a good boy. I was a smart kid. I had to re-elect to study. I knew I was a gay kid, but I wasn't out. So I was kind of just sort of, you know, trying to be a good kid. And it was kind of like, I don't want to go down that path.
16:24So that was the one part of it. The second part was, I had a cousin when I was probably like 13 or 14 who was diagnosed with HIV. And she, she, straight woman, was 17 at the time. So that was a whole big thing that ran through the family and the church. We were just kind of like, whoa, like, how do we deal with this? She started to use some of the early onsets of the HIV medications. And one of the side effects was nausea. And I remember that my friends and other people were helping her get weed to smoke to help her eat. And I saw that, but I also knew that this was like something that was supposed to be bad.
16:54And I was like, well, I don't really understand. But it was just like confusion and confluence of different ideas. I know it's helping my cousin and helping people who need it. I know the gay community is fighting for it. I'm questioning all the information I've been getting from the public and the press and my parents about, you know, drugs are bad. This one seems to sit outside of the heroin crack, you know, the crazy ones. This belief Willie was arriving at, that weed might be different from the more hardcore drugs, that it might even be a good drug, or that good drugs might exist, that belief was reaching him in part because it was being broadcast through the culture by a powerful cannabis activism movement.
17:34But even as culturally many Americans' views on cannabis softened, the government kept going harder and harder with enforcement. And nowhere more than here in New York, the cannabis arrest capital of the country. From the late 90s to the mid-2000s, there were more than 350 ,000 arrests here for cannabis possession, an increase of more than 1 ,000 % from the 10 years prior. I talked to one of the people swept up in all this, a man named Alex Norman. He's in his 50s, the son of Cuban immigrants. He lives in Bed-Stuy. Back in the day, he was what you'd call a weed dealer, or what today we would call a former operator from the legacy market.
18:14Can you tell me about your background in the legacy market as an operator? Yeah, I managed and ran a delivery service for a long time. How do you start a delivery service in the legacy days? You just go to everybody that you know that smokes weed and say, hey, if you need weed, just give me a call. And you show up. Show up on time and have good quality product. and have it priced well and be consistent. Alex had had a white-collar job in finance. He left it with plans to go to business school, but he'd always smoked weed, and he thought maybe just for a little while that he'd try selling it. It was supposed to be very temporary.
18:52Instead, it turned out to be very profitable. So it was just like one of those things I'm like, well, I'm going to keep doing this until I figure out how I can transition one way or another, but I can't just let it go. So it was just one of those things that I just kept doing. At the height of prohibition, stories in the press about weed dealers tended to portray them as ruthless criminals, pushers. In our current legalization era, stories in the press usually describe former weed dealers as desperate victims of circumstance. It was refreshing to meet Alex, a person who identified as neither, just a guy with an eye for an opportunity.
19:30Back in the day, Alex says he ran his service tight. When he did his deliveries, he only went to his regulars. He never smoked in the car. Product in the trunk, car under the speed limit. But in 2005, he got caught. So everybody thinks that I got arrested by doing my delivery service. My delivery service never got popped. Ever. It never even came close. Because I had a delivery service, I became more ambitious, and I wanted to start my own full vertical operations. So I wanted to start growing. It's just like the most natural thing. It's like growing up in New York City and you want to learn how to play basketball.
20:11Same thing with weed. Like if you smoke weed, you're around weed. Everyone's just wants to grow weed. And so I was no different. And basically I got busted because the door got kicked in at my grow.
20:28So I wasn't there. I was cutting without getting into much of the details. It was the guy that was working for me that day doing deliveries because I worked Monday through Friday's weekends. I had a delivery guy that worked on the weekend. The guy that was working, I didn't know, had gone on an all-night bender, and he wasn't answering my calls. So Alex is in the basement of an apartment building, trimming cannabis off of his cannabis plants. His driver is supposed to be delivering weed to clients, except he just isn't. The orders are piling up, And around 5 p.m. that day, Alex mutters to himself the cursed phrase of middle managers everywhere.
21:08I guess I'm going to have to do this myself. So I was like, I got to fucking, I got to stop. I got to get, this guy's full of shit. He's not, he's not, he's done. Like, he's not waking up. So I basically left my apartment. Plants were everywhere. I didn't really even get a chance to, like, spray down, kill the smell, burn the candles, air stuff out. And so I basically just left the whole apartment just with, imagine just fucking weed hanging everywhere and nothing bagged up. It was just, I rushed out of there and I came back that night. It was probably like 12 o 'clock that night. I was coming back to clean up.
21:45The cops had kicked in the door at the basement and there was like four cops downstairs and they're like, hey, Sarge, I got them. And I was like, fuck. And they got me. So then did you stop doing the service? No. No. No, I mean, I can't do it. It was my job. I just had to be even more careful.
22:09Alex fought the case, managed to bargain down to a few years' probation. He continued to sell weed in New York throughout the 2010s, and he never got caught again. By this point, though, there's a real shift happening. Not in New York, but in other parts of the country. New York State still considered Alex a criminal. but elsewhere other states were legalizing weed and even trying to make amends with the people they'd arrested.
22:35After the break, California. Thank you.
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25:03Chapter 2. California.
25:09Well, as of this morning, recreational marijuana is now legal in California. California joined seven other states and the District of Columbia where recreational marijuana is legal. In November 2016, California officially, and to much fanfare, fully legalized recreational weed. California is the largest market in the nation, and that has many other states watching closely. Other states were watching California not just because it was the largest legal market, but because its legalization plan contained an audacious idea, an experiment. In some counties, the government was trying to build the weed market so that it would be led by the same people who'd been arrested during Prohibition.
25:50Those efforts would go awry. The California experiment would be considered by many a disaster. By the time New York legalized, California would be a warning, a lesson in what not to do. But that would come later. In the beginning, things seemed miraculous. Willie Mack, at that point, not yet a cannabis activist, just a marketing guru with an abiding love for weed, moved to California on the very cusp of recreational legalization. He got to watch as the old underground market prepared to step into the light. I moved to L.A. I was tired of the cold in New York and wanted a bit of a change, you know, the sunshine.
26:28And then I fell into someone was like, hey, California is going to become legal. There's a law firm that has a bunch of cannabis clients that are now looking to build more brands. His name is Eric Shevin. Awesome guy. Great friend. And he was like, my business as a defense attorney will at some point start to go down because cannabis— Oh, so he was defending people who at the time were selling—my brain keeps me like, don't say weed. You can say weed. Yeah, yeah. It's fine. It's just like my firmware is updating. So he was defending clients who were getting arrested for selling pot, weed, cannabis.
27:00But he's like, oh, I can see over the next hill, which is that if legalization is coming to California, I'm going to be out of business. Yeah. He was helping them get dispensary licenses, helping them deal. Oh, he was helping them transition. Yeah. And one of them was my clients who have transitioned. They're asking me for, I need a cannabis accountant. I need a cannabis graphic designer. I want to build a brand. Like, do you know anyone that might help us be able to do this? Because it was a new market and it's a whole new industry that was being built. Oh, that's fascinating. Because a person selling weed in pre-legalization did not have to.
27:29Right. The packaging is a bag. I don't need an accountant. I don't have to tell anybody how much money I'm making. I'm not paying taxes, so why do I need an accountant? I don't want to show that I made any money. I want to make it with this money and hide it. Maybe we have a lawyer in case I do get popped, but I don't want to have books because this is illegal. I'm not having QuickBooks manage my, you know, sales of weed. So they don't need one. The scenes Willie describes of the old market joining the new one, to me, they're funny, but also a little bit beautiful. People who'd had to hide their businesses their whole lives were now joining the rest of the corporate world with all of its inefficiencies and annoyances.
28:06They were getting looped in. They were circling back. Willie's cell phone rang off the hook. I would get random phone calls. Hi, my lawyer Eric told me to call you. I don't like talking on the phone. Can we meet face-to-face? When can you meet me? I'm like, sure. Were these guys like unused to just participating in modern capitalism? Like, was it strange working with them? Yes. Yes. Like, they did not understand what an iCal was or a Zoom, like a Zoom phone call, like a conference call. Right. You're trying to calendar stuff. Oh, yeah. I'm trying to get them to use email. I'm trying to get them from like not texting me and being like, can we only meet in person and talk in person because I don't like talking over the phone.
28:44Right. Like, I'm trying to get them to just sit down and like review notes from a meeting. You know, they're tracking money and doing stuff. I mean, they're making millions of dollars. Some of them, they built the whole industry for decades. So it wasn't like it wasn't working. It's just it was working under the shadows and underground and the legacy side.
29:03You can tell these were heady days, right? The potential was so clear, intoxicating. Even today, there are wealthy families who got their start generations ago as alcohol bootleggers. Maybe this, people hoped, could be like that. Generational wealth. but that dream would melt pretty quickly. What went wrong in California? I've heard a lot of different versions of the story. It's complicated. It's probably its own podcast. But let me tell you about the parts you need to know. Problem number one was access to cash. Picture the legacy dealers that Willie was talking to. They told weed, but maybe they'd never run a traditional business.
29:42Once the state gave them their official license, now what? To start an illegal weed company, you might need$10 ,000, a car, and the name of a guy with a grow in the Emerald Triangle. To start a legal weed company, you need access to a lot more money, mainly because weed is still federally illegal. It's crazy. I mean, even banking. You can't use credit cards. You can't use banks. You can't deduct taxes. Cannabis businesses cannot deduct anything besides the cost of goods of manufacturing a product. So you don't have the opportunity to deduct any of the normal operating expenses around your business.
30:15So every cannabis business in this country still has to pay federal taxes, but you cannot deduct payroll, rent, insurance, any of those like marketing, all that. Nothing besides the cost of goods for the product that you're making. If you're a cultivator, you can deduct the dirt cultivation facility and the flowers and all that stuff that goes to the product, but nothing else that is not tied to the cost of goods. It's crazy to imagine a business that can't deduct expenses. Yeah, it's crazy. I mean, it's extraordinarily hard because you're now starting at, what, negative 60 cents or every dollar you make.
30:50So these are expensive businesses to run, very cash intensive with no access to traditional bank loans. The state gives you a license to sell weed. Cool. But if you want to succeed, you now need to find a ton of capital. I was talking about this problem with a corporate and regulatory attorney in the cannabis industry in New York named Jeff Schultz. Jeff, like everybody else here, is a student of the California story. He said one of the issues there was that the state was giving legacy dealers licenses, but often without any real business support. You can give a license to somebody, but if they don't have money to operationalize it, it's a license to lose.
31:30It's a license to do nothing. It's a piece of paper without the money. These legacy dealers with licenses needed money, and typically they had to go to private investors to find that money. In California, that was problem number two, opportunistic investors. You have sophisticated investors coming in who are negotiating partnerships with relatively unsophisticated, financially unsophisticated, operationally unsophisticated operators. Those licenses aren't also necessarily going to people who have participated in the legacy market, who understand the cannabis industry really well. They may just be people who have otherwise been harmed by the war on drugs, but may not be actively engaged in the illicit market.
32:12According to Jeff, these newbies with licenses ended up making deals that were often good for investors and not so good for them. California created a situation where sophisticated investors often took advantage of the people entering the legit weed market as newbies. Jeff said if politicians are going to try to create an equity market like this, somebody also needs to make sure the deals are fair. And we haven't really seen that. We've actually seen a lot of the opposite. We've seen in California, generally speaking, people taking advantage of social equity licensees. And it starts with the lack of financial sophistication.
32:48I'm going to give you X amount of dollars and we're going to put it into a contract that you may not understand. And the state allowed for that. So California broke down because legal weed businesses are expensive to run. And these rookie business owners did not have the experience or access to capital to succeed. That's a version of the story. But there's at least one other enormous obstacle that helped sink a lot of those people. It actually came up when I was talking to Alex Norman, that New Yorker who used to run a weed delivery service. Alex Norman, of course, another student of California.
33:24I was always watching what was happening in California. And I had a lot of friends that were in New York that moved to California that were pieheads too and, you know, used to hustle and were always telling me stories about what was happening in L.A. with the illicit shops there and how the black market there was evolving. And they're like, people don't buy at dispensaries. They still buy in the black market. This is why, because a lot of people, for people who believe that there should be a legal market that tries to repair the mistakes that the state made with prohibition, they look at California and they say, yeah, it's good that people can buy weed without being afraid, but it's also a failure, you know, that the people in the legacy market were not set up to succeed.
34:09What was an example of that? Because people say that, like they say that as a talking point, but we were exactly like, what's the example of that? You mean of... Where was the legacy market not set up to succeed? And how many actual legacy operators wanted to actually transition? You're skeptical of that. No, I'm not skeptical. I'm just skeptical of that premise because I think it's just a talking point because I talk about this all the time with people. And I know a lot of legacy operators that don't want to transition. Alex's theory is simple. Problem number three, the black market.
34:51The people who sold weed during Prohibition, many of them just didn't stop. And why would they? They already had profitable businesses. Now they could operate more freely than ever before. The new legal stores couldn't outcompete them because regulated weed is more expensive. And crucially, California counties could opt out of having weed stores, which a majority did. That left a ton of customers for the legacy dealers. What happened in Cali built over time because it wasn't like Cali legalized dispensaries open, black market exploded. It was a slow buildup, right? So when the shop started opening, everybody was reading all the news articles about like how they were making millions of dollars.
35:37This was a new gold rush and kind of just not recognizing like what was happening underground. So to recap, competition from the black market, lack of access to capital, opportunistic or perhaps even predatory investors, those obstacles helped sink California's ambitious plan for the new weed market to address the wrongs of the recent past. It turned out, though, the wrongs of the recent past made really good promotional copy in this slick video made by MedMen, the venture capital-backed cannabis company that would end up being California weed's earliest visible success story. Hey, you want to witness some history?
36:19Okay, back in the day, George and a few of our founding fathers had hemp farms. Yeah, a president grew his own. Look it up. It was normal. Mad Men got Spike Jones, one of my favorite directors, to put this brand story together for them. It's gorgeous. It almost looks like a Nike commercial for cannabis. You see a series of dioramas, like a natural history museum. But these are scenes from the dark history of cannabis prohibition. The point is, these punishments have been harsh. Like, 25 years in a prison harsh. That's madness. The video is telling the same story Willie told us earlier about the war on drugs, but here it's a commercial.
37:03Marketing for a high-end California cannabis brand aimed essentially at convincing wine moms that weed is now compatible with mainstream culture. Every day, good people are using it to calm their pain, their stress, their anxieties. And a product that drove people to the black market is now creating a new global market. If you've got a couple hours and don't feel like talking much, ask a cannabis activist their feelings about MedMen, a company with two white founders that dominated the nascent recreational industry for a spell. A great place to shop, that Apple store for weed, everyone says the same phrase, but nobody's idea of reparations for anything, really.
37:46MedMen does not even dominate California's weed industry anymore. But their name is where everyone always ends the story. The punchline at the end of a joke no one found particularly funny.
38:00And so, when word got out that New York was finally about to legalize weed, everybody agreed, this time, things were going to be different. They had to be.
38:17After the break, New York. Thank you.
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40:02Chapter 3, New York. In 2018, Willie Mack decides he's going to help start a cannabis lifestyle brand. His business partner? C.J. Wallace, son of Christopher Wallace, the late Notorious B.I.G. one of Brooklyn's most beloved former operators in the legacy market. CJ and Willie didn't just want to start a business, they wanted to be activists, too. Because over the past years, Willie had been disappointed and politically inspired by what he'd seen in California. With New York on the verge of legalization, CJ and Willie decided they wanted to try to shape things there. I was watching California and all these companies get legal, and I'm like, well, one, I don't see a lot of people who look like me, because I was CMO of a startup in California.
40:48I'm like, not a lot of Black people in C-level roles and not a lot of gay people. And I was like, okay, so this is a problem. And as we see legalization happening and watching all of the straight white men take ownership of the industry and make a bunch of money and have this sort of, you know, the Med Men and all this massive run and turn it to Apple stores, but yet leaving Black people, queer people, women behind, I'm like, well, fuck that. A lot of people felt like, fuck that. They'd been promised not just a legal weed industry, but a legal weed industry that would be equity forward. And in California, they hadn't gotten it.
41:22In New York, activists would get another run at the goal. And in New York, due mainly to several accidents of history, they would have way more political power than the California activists ever had. New York's activists were about to benefit from a very strange series of events. In February 2020, the governor of New York is Andrew Cuomo. This was pre-COVID. And Cuomo was in not a fight, but a political dispute about how New York's forthcoming weed legalization should go.
41:59An assemblywoman named Crystal Peoples-Stokes, the assembly majority leader from Buffalo, had sponsored her bill, which, if passed, would be the most social equity-focused cannabis law in the entire country. Crystal People Stokes, thanks for joining us on New York Now. We're really glad to have you here. Thank you for inviting me. It's my pleasure. This is a clip of Stokes appearing on New York Now in February 2020, explaining her vision. Stokes was convinced that her bill could actually fix the problems of California. If you look at every other state or country that has legalized the use of marijuana, There have not been specific resources provided to invest in those communities that have received the most harm as a result of the mass incarceration.
42:42In New York, we like to do that different. I've never drafted a bill, but even I can admire the elegance of Stokes'. In her plan, a big pile of weed licenses would go to people who'd been arrested or who had family members who had. But unlike in California, these licenses were set up so that an investor couldn't just come in and immediately take it away from the licensee. The licensee had to be a 51 % owner in their own business, at least for the first four years. And they had to have a proven legitimate business track record. They couldn't be totally inexperienced. And the state would even provide a fund of money so these licensees would not be without capital.
43:22Take that, California. There were a few things Stokes and Governor Cuomo were betting heads over, though. Mainly, what would happen with the tax money the state would raise from cannabis? Stokes wanted 40 % of it to go into a dedicated fund to rebuild over-policed neighborhoods. Cuomo wasn't into that. And at the time, Cuomo was extremely powerful. So is that dedicated fund kind of a deal-breaker? You won't agree to agree? If we can't fix the problems that mass incarceration created, it, what would be the value of adding resources to the state's budget? New roads? It's kind of amazing to hear a politician reference money for new roads and then just fit off.
44:07Politicians typically love to brag about building more roads. Voters across the aisle love infrastructure. But Crystal Peoples-Stokes is saying something you just would not hear outside of New York. The state getting more money from cannabis taxes and using that money for roads? Not good enough. The state needed to fix its mistakes. Governor Cuomo's plan, again, was more modest, although he was smart enough to talk the same talk. For decades, communities of color were disproportionately affected by the unequal enforcement of marijuana laws. This is Cuomo in 2020, discussing his modest vision for cannabis reform, the one that honestly seemed likely to pass.
44:48This year, let's work with our neighbors, New Jersey, Connecticut, in Pennsylvania to coordinate a safe and fair system and let's legalize adult use of marijuana. In Cuomo's bill, the money that legalization raised would go to a general fund. Governors like him could then spend it however they wanted. It was hard to imagine what could break the deadlock. New tonight, a bombshell revelation from another former aide of Governor Cuomo's. In a published report, she claims he sexually harassed her. And then in December of 2020, a sexual harassment scandal, plus a whole separate scandal involving the deaths of people from COVID in nursing homes.
45:29Now, these accusations follow recent revelations that the governor and his team withheld data about the actual number of people who died of coronavirus in nursing homes. So far, several Republicans and even a couple of Democrats have called on the governor to resign. We're live in Midtown. Willie Mack was one of the activists supporting the Crystal People's Stokes version of the bill. He'd been frustrated by Cuomo's resistance, but now... He got the pressure put on him, and the legislature had unified. So now they're like, we have a bill we want to pass. We have the votes to pass it. You know, perfect storm of COVID and, you know, all the things that were going on, including his scandal, made it so that it's like, all right, I guess I got to sign this now.
46:11All of a sudden, it's like, we're voting soon. We have the votes. I think we're going to get this passed. And it was like, oh, really? Yeah. Is this going to actually happen? It's like, oh, yeah. Well, it is official today. Marijuana is legal in New York. Breaking news this noon. Governor Cuomo has signed a bill legalizing recreational marijuana in New York. Recreational marijuana now legal in New York after an historic vote in Albany and the governor's signature. The Marijuana Regulation and Taxation Act passed on March 31st, 2021. The version that Crystal Peoples-Stokes had championed was now law.
46:50Weed is legal And we're in New York City With it
47:01That's the empty, bro It's empty It's empty And you know my bop We couldn't do this Without Cuomo Psych As you can hear In this side talk video New Yorkers felt Pretty good about this It was a good day For smokers I talked to Alex Norman The guy with the delivery service In Bed-Stuy about that day. Do you remember when New York State legalized cannabis? I do, because everybody on my block was outside of their front porch smoking weed.
47:31It was beautiful. Watching so many people do something they'd always done. But now, for the first time, without fear, here's Willie Mack. Did you celebrate? Yeah. I'm assuming by smoking weed. Smoking some weed, having some champagne. I think we probably did a little dance. Just like the team was just like, wow. And I remember the first time I smoked a joint outside, I was like, whoa, this feels so weird. All my life I've dreamt of being able to smoke a joint in New York and not be afraid of getting arrested. And now I can do that without getting afraid of being arrested. Everything was set up to go perfectly.
48:02The state just needed a little time. A little time to iron out the particulars, the details of how the new legal market would work. The politicians seemed confident if they did this right, they could avoid the mess of California. There would be no med-mens in New York. That was March 2021. What the state failed to predict was the unique New York-specific mess that would be created here. It is now March of 2024. It has become clear to New Yorkers that something is amiss. The local news can tell. There are around 2 ,500 illegal weed shops across the five boroughs. The state says the tax loss is staggering.
48:43It seems like it's the only business you see opening up nowadays, honestly. The people on TikTok can tell. Why is there a smoke shop on every block now in New York? New York really said, let's put a smoke shop here. Let's put a smoke shop here. I'm not trying to be fucking dramatic, but I don't know what happened to my city. That all the fucking delis turns into smoke shops. Noah and I wandering around outside on the street can tell. We walked maybe a five minute walk. We have passed, I've lost count now, but like eight or nine stores? A lot of options. In New York State, there are 90 legal weed stores serving our population of 19 million people and thousands of illegal ones.
49:24The shops Noah and I saw outside that day, choking the legal market before it really has a chance to begin. What happened? And is there a chance it could all still be fixed?
49:42Next week, we have the story of the mess and the people trying to solve it, recordings from the meetings where it all happened, truly an extraordinary story where we go deep into the bowels of the tragedy and comedy of a very ambitious project of reparations. Don't miss this one. That is next week on Search Engine.
50:20Thank you.
51:12Thank you. Your sausage McMuffin with egg didn't change. Your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just$5. Only at McDonald's for a limited time. Prices and participation may vary.
51:39Search Engine is a presentation of Odyssey and Jigsaw Productions. If you enjoyed this episode, or any episode, please consider paying for the premium version of the show, Incognito Mode. You can sign up at searchengine.show. I said earlier that a ton of people signed up this past week. The best part was just hearing where listeners are listening from. Australia, Japan, New Jersey. And who these people are. Doctors, farmers, public defenders. A former corrections officer who also confirmed a question we had from our scammy text episode. They said, quote, It's 100 % true that inmates smuggle phones in their butts and charge them by wiring them into lights.
52:20What a world. If you would like to join Incognito Mode or learn more, visit us at searchengine.show. Search Engine was created by me, PJ Vogt, and Shruthi Pinamineni and is produced by Garrett Graham and Noah John. Fact-checking this week by Mary Mathis. Theme, original composition, and mixing by Armin Bazarian. Special thanks this week to Amanda Chicago-Lewis and Eric Shevin. Our executive producers are Jenna Weiss-Berman and Leah Reese-Dennis Thanks to the team at Jigsaw Alex Gibney, Rich Perello, and John Schmidt And to the team at Odyssey J.D. Crowley, Rob Mirandy, Craig Cox, Eric Donnelly, Kate Hutchison, Matt Casey, Maura Curran, Josephina Francis, Kurt Courtney, and Hilary Sheff Our agent is Oren Rosenbaum at UTA Follow and listen to Search Engine now for free on the Odyssey app or wherever you get your podcasts Thank you for listening.
53:12We will have the rest of this story next week.
From the publisher
In 2021, New York legalized cannabis for adults. It was supposed to be the start of a legal market, led by people arrested during prohibition. Instead, a strange new market has flourished, seemingly every formerly empty store in the city now sells weed. How'd that happen? In part one, the history of prohibition and how it helps explain the mess we're in now.
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